Monday, 4 October 2010

Tories and LibDems break campaign promises on child benefit

George Osborne has said the government will remove child benefit from 2013 from any family with an earner earning £44,000, and so paying the 40p rate of tax. This will be a loss of £2000 a year for a family affected with three children. Double-earner households with no higher rate earner will not be affected, even if they have a household income in the £60,000 - £70,000 range as long as both incomes are under £44,000.

The leaders of both governing parties were very clear that they would not do this during the General Election.

The lesson is that you can trade away a manifesto promise to your coalition partners. But coalition can't be used as an excuse to break a promise that you have both made.

If the governing parties were to take what they told voters during a campaign seriously, they could pre-announce the change to come into effect immediately after the next election. They would then have a mandate for it. That would be the only honest way to break such clear election pledges.

In this Parliament, they ought to be constrained by what they told the voters during an election campaign. They could not possibly credibly claim that there is anything about the public finances they know now that they did not know when they made their promises not to do this.

For the Conservatives, Shadow Chief Secretary to the Treasury Phillip Hammond told Newsnight on April 27th.

We have made a decision to rule out means testing child benefit because it is a universal benefit. Talking to people, one of the things they appreciate about child benefit that it is universal and easily understood. To start to means test it would erode it ... It reassures them about the availability of the benefit. If you start means testing it, if you start slicing away at that universality, then people are going to ask where you are going to stop".

The LibDem position flipped and flopped. Vince Cable said he would rule nothing out or in on the same programme. Yet Nick Clegg had made a clear and unequivocal commitment in his single election interview watched by more voters than any other, with Jeremy Paxman on April 12th.

"We are not putting child benefit into question. I never have and he hasn't either" said Clegg, giving an unequivocal commitment to universalism and claiming that neither he nor Vince Cable had ever suggested anything else.

Clegg's statement that he had never questioned universal child benefit was completely false. Next Left has set out how Clegg and Vince Cable had both launched an assault on universal child benefit ahead of last year's party conference, with Clegg calling it "patently silly and unfair" for it to go to the highest earners in his infamous "savage cuts" interview with The Guardian (though Clegg cited people on "multi-million pay packages in the City", not families with an earner on £45,000, though he said too that he was cautious of destroying "middle-class solidarity" with the welfare state). He was slapped down by his frontbench spokesman Steve Webb, who told a Fabian fringe the party would remain committed to universalism on child benefit and, just for good measure, that his leader's suggestion was absurd.

Clegg could hardly have been clearer that he regarded the debate as closed, and he asked people to vote on that basis. This was his full exchance with Jeremy Paxman as the election campaign began:

JP: Can we just clear up something on child benefit: in September last year, you said you wanted to get rid of child benefit for high earners. At the start of ...

NC: No I didn't say get rid of it. I didn't say; I've never said that.

JP: You've never wanted to get rid of it for high earners.

NC: No, I've never said that.

JP: But Vince Cable said in the Chancellor's debate,only a matter of two or three weeks ago, that he did want to get rid of it.

NC: No, he made quite clear, within minutes I think of the debate , that he misspoke, and that what he meant was the child component of the child tax credit system.

We are not putting child benefit into question. I never have and he hasn't either.

If the LibDems claim today they did not rule out means-testing child benefit, they are rewriting the history of the campaign, as their leader clearly did so, even if their Shadow Chancellor candidate (to a much smaller audience) did not. If a party leader chooses to get across a clear promise when as many people as possible are watching, voters might reasonably expect it to be kept and the leader and party to be held to it.

Vince Cable: "We can't rule anything out, but we are not arguing for that. We are arguing that we should restrict child tax credit, as opposed to child benefit, should be restricted to people on people on middle and low incomes".

...

Wark: There you have an answer from the Conservatives and Labour at least on child benefit.

Cable: We are not arguing for means testing child benefit.

Wark: You are not arguing for it but you are not ruling it out.

Cable: Of course not. I am trying to be honest and saying we have a serious problem and we are going to look at everything.

This hits single earner households even more unfairly than you state. At the moment claiming child benefit also gives you an automatic top up to your National Insurance whilst your child is small. Take that away from the partners of those earning around £45k and they are even worse off. Not much of a reward to those doing what the Tories claim to want and ensuring one partner looks after the kids.

Thanks for the NI point, which will particularly affect career break mothers.

There would also appear to be some important issues with the marginal tax rate, based on somebody getting a pay rise which would take them into the top rate, once these changes are made.

All of these things would appear to happen at once:

* Start paying the new 40p rate on further earnings (reducing the value of the additional income)

* Lose child benefit (the amount will differ according to the number of children, but could be £2500 for 3 children), esp if there is no taper.

* there is also the tapering away of the effect of the £10k threshold change, so that higher rate payers do not benefit from the changes once paying the 40p rate.

* finally, when the Tories introduce their £150 marriage tax break through transferable allowances (which 1 in 3 married couples will get, though double-earner households won't), that will also be lost by anybody who gets it at the same point, exacerbating further this marginal rate issue at that point.

The regressive impact that this announcement will have on women and children is worrying. The argument that the removal of this universal benefit will only affect a minority group is an ignorant one to make. It is an accumulation of minority groups that make up society. We aren't all disabled, women, men etc but we are entitled to rights and benefits that despite our differences.